Conglomerate

A conglomerate is a large company that consists of divisions ofseemingly unrelated businesses .

Conglomerates were popular in the 1960s due to a combination of low interest rates and a repeating bear/bull market, which allowed the conglomeratesto buy companies in leveraged buyouts , sometimes at temporarilydeflated values. Famous examples of the 1960s conglomerators include Ling-Temco-Vought , ITT , Litton , Textron and Teledyne . As long as the target company hadprofits greater than the interest on the loans, the overall return on investment of the conglomerate appeared to grow.

For many years this was enough to make the company's stock price rise, the aggressive nature of the conglomorators was enoughto make investors buy their stock. When that happened they were able to raise more loans, backing them with their high stockprices. This led to a chain reaction , which allowed them to grow veryrapidly.

However, all of this growth was somewhat illusitory. As soon as interest rates started to rise in order to offset inflation , the profits of the conglomerates fell. Investors also noticed that thecompanies inside the conglomorate were growing no faster than they had before they were purchased, whereas the excuse for buyinga company was often that "synergies" would lead to more effeciency. By the late 1960s they were frowned on by the market, and amajor sell off of their shares ensued. In order to keep the companies going, many conglomerates were forced to shed theindustries they had purchased recently, and by the mid-1970s most had been reduced to shells.

Most conglomerates have generally proven unsuccessful. One exception is General Electric , who's huge industrial equipment surplus was turned into a successful rental and leasingbusiness. Cash flush during the 1980s, GE also moved into financing and financial services, which today accounts for half of thecompany's income. In some ways GE is the opposite of the "typical" 1960s conglomorate: the company was not highly leveraged, andwhen interest rates went up they were able to turn this to their advantage.

See also

• Japanese zaibatsu , keiretsu
• South Korean conglomerates

In geology , a conglomerate is a rock consisting of other stones that have been cemented together.Conglomerates are sedimentary rocks consisting of subangular clastsand are thus differentiated from breccias , which consist of angular clasts. Bothconglomerates and breccias are characterized by clasts larger than sand (>2 mm).

There are two varieties of conglomerate, defined by texture: paraconglomerates and orthoconglomerates .

A spectacular example of conglomerate, the Crestone Conglomerate, may be viewed in and near the town of Crestone, Colorado at the foot of the Sangre de Christo Range in Colorado 's San Luis Valley . The Crestone Conglomerateis a metamorphic rock statum and consists of tiny to quite largerocks that appear to have been tumbled in an ancient river. Some of the rocks have hues of red and green.

When a conglomerate is formed deep within alluvial fans in desertenvironments, the resulting rock is often called a fanglomerate.